BILL NUMBER: SB 1232	CHAPTERED  07/21/00

	CHAPTER   162
	FILED WITH SECRETARY OF STATE   JULY 21, 2000
	APPROVED BY GOVERNOR   JULY 21, 2000
	PASSED THE SENATE   JULY 6, 2000
	PASSED THE ASSEMBLY   JUNE 29, 2000
	AMENDED IN ASSEMBLY   FEBRUARY 3, 2000
	AMENDED IN ASSEMBLY   SEPTEMBER 3, 1999
	AMENDED IN SENATE   APRIL 12, 1999

INTRODUCED BY   Senator Chesbro
   (Coauthor:  Assembly Member Wiggins)

                        FEBRUARY 26, 1999

   An act to amend Sections 25502.1 and 25503.30 of the Business and
Professions Code, relating to alcoholic beverages.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1232, Chesbro.  Alcoholic beverages:  tied-house restrictions.
   The Alcoholic Beverage Control Act contains limitations on sales
commonly known as "tied-house" restrictions, which generally prohibit
a manufacturer, winegrower, manufacturer's agent, California
winegrower's agent, rectified, distiller, bottler, importer, or
wholesaler from owning any interest in an on-sale or off-sale
license, licensee, or licensed premises.  Existing law contains
various exemptions from this restriction on tied interests, including
an exception permitting any winegrower, or its direct or indirect
subsidiaries, as specified, to hold an ownership interest or
financial or representative relationship in any on-sale license or
the business conducted under that license, provided that certain
conditions are met.  These conditions include that the on-sale
licensee purchases all alcoholic beverages sold and served only from
California wholesale licensees, and that none of the persons falling
under this exemption have an interest in more than two on-sale
licenses.
   This bill would permit wine sold under this exemption to be
purchased from California winegrowers as well as from California
wholesale licensees, and would provide that those direct sales may
not involve more than 2 on-sale licenses in which the winegrower or
any person holding an interest in the winegrower holds any interest,
directly or indirectly, either individually or in combination or
together with each other in the aggregate.
   Existing law provides that for purposes of the "tied-house"
provisions, the listing of the names, addresses, telephone numbers or
e-mail addresses, or both, or web site addresses, of two or more
unaffiliated off-sale retailers selling the products produced,
distributed or imported by a nonretail industry member in response to
a direct inquiry from a consumer received by telephone, by mail, by
electronic Internet inquiry or in person does not constitute a thing
of value or prohibited inducement to the listed off-sale retailer, if
specified conditions are met.
   This bill would make a technical correction to these provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 25502.1 of the Business and Professions Code is
amended to read:
   25502.1.  Notwithstanding Section 25502, the listing of the names,
addresses, telephone numbers and/or e-mail addresses, or web site
addresses, of two or more unaffiliated off-sale retailers selling the
products produced, distributed and/or imported by a nonretail
industry member in response to a direct inquiry from a consumer
received by telephone, by mail, by electronic Internet inquiry or in
person does not constitute a thing of value or prohibited inducement
to the listed off-sale retailer, provided:
   (a) The listing does not also contain the retail price of the
product, and
   (b) The listing is the only reference to the off-sale retailers in
the direct communication, and
   (c) The listing does not refer only to one off-sale retailer or
only to off-sale retail establishments controlled directly or
indirectly by the same off-sale retailer, and
   (d) The listing is made by, and/or produced by, and/or paid for,
exclusively by the nonretail industry member making the response.
   For the purposes of this section, "nonretail industry member" is
defined as a manufacturer, winegrower, distiller of alcoholic
beverages, regardless of any other licenses held directly or
indirectly by such person.  Except as specifically provided above,
any payment for, making or production, either directly or indirectly,
listing the names, addresses, telephone numbers and/or e-mail
addresses, or web site addresses, of off-sale retailers otherwise
authorized by this section by a wholesaler or by a wholesaler that
also holds an importer's license  shall constitute the furnishing of
a thing of value or inducement to the listed off-sale retailers in
violation of this division.
  SEC. 2.  Section 25503.30 of the Business and Professions Code is
amended to read:
   25503.30.  (a) Notwithstanding any other provision of this
division, a winegrower or one or more of its direct or indirect
subsidiaries of which the winegrower owns not less than a 51-percent
interest, who manufactures, produces, bottles, processes, imports, or
sells wine and distilled spirits made from grape wine or other grape
products only, under a winegrower's license or any other license
issued pursuant to this division, or any officer or director of, or
any person holding any interest in, those persons may serve as an
officer or director of, and may hold the ownership of any interest or
any financial or representative relationship in, any on-sale
license, or the business conducted under that license, provided that,
except in the case of a holder of on-sale general licenses for
airplanes and duplicate on-sale general licenses for air common
carriers, all of the following conditions are met:
   (1) The on-sale licensee purchases all alcoholic beverages sold
and served only from California wholesale licensees.
   (2) The number of wine items by brand offered for sale by the
on-sale licensee that are produced, bottled, processed, imported, or
sold by the licensed winegrower or by the subsidiary of which the
winegrower owns not less than 51 percent, or by any officer or
director of, or by any person holding any interest in, those persons
does not exceed 15 percent of the total wine items by brand listed
and offered for sale by the on-sale licensee selling and serving that
wine.  Notwithstanding paragraph (1), wine sold pursuant to this
provision may be purchased from a California winegrower so long as
the wine purchased is produced or bottled by, or produced and
packaged for, the same licensed winegrower that holds an interest in
the on-sale license and such direct sales do not involve more than
two on-sale licenses in which the winegrower or any person holding an
interest in the winegrower holds any interest, directly or
indirectly, either individually or in combination or together with
each other in the aggregate.
   (3) None of the persons specified in this section may have any of
the interests specified in this section in more than two on-sale
licenses.
   (b) The Legislature finds that, while this section provides a
limited exception for licensed winegrowers, that limited exception is
granted for specific purposes, and that it is also necessary and
proper that licensed winegrowers maintain the authority granted under
this division to sell wine and brandy to any individual consumer or
any person holding a license authorizing the sale of wine or brandy.

   (c) The Legislature finds that it is necessary and proper to
require a separation between manufacturing interests, wholesale
interests, and retail interests in the production and distribution of
alcoholic beverages in order to prevent suppliers from dominating
local markets through vertical integration and to prevent excessive
sales of alcoholic beverages produced by overly aggressive marketing
techniques.  The Legislature further finds that the exceptions
established by this section to the general prohibition against tied
interests must be limited to their express terms so as not to
undermine the general prohibition, and the Legislature intends that
this section be construed accordingly.
